TSC (formerly known as The Shopping Channel) had a problem in the jewelry department. It accounted for 20 percent of the online and TV retailer’s business, but it was also a bottleneck. Space was cramped in the open shelving where jewelry items were stored and a security guard was on duty 24/7, watching over the high-value items.
“It was all out on the floor,” says Sue McGibbon, TSC’s jewelry manager. “We might carry two of an item or we might carry 100 of an item, but for jewelry it’s all really small quantities. When you think about the amount of product in small quantities out on the floor it didn’t make sense. It was taking up a lot of space; picking was very difficult because we store product in these small cardboard trays. You’ve got to picture thousands of those out on the floor.”
Headquartered in Mississauga, Ontario, TSC is a multi-channel retailer, offering a vast assortment of exclusive products and top brand names to customers throughout Canada. With roots as a televised shop-from-home service reaching into over seven million Canadian households, TSC expanded to online, growing into one of Canada’s most innovative retailers. It provides customers shopping convenience with products in health and beauty, jewelry, home and lifestyle, fashion and accessories, and electronics.
Over 15,000 products are available to customers 24/7 with the click of a button or quick phone call. Managing and distributing 15,000 rotating SKUs can be quite the challenge, but TSC needs to met customer delivery expectations at every turn.
Time for some polish
TSC is supported by a 300,000 square foot warehouse equipped with the latest material handling technology, shipping roughly 10,000 orders a day. With increasing demand and a premium on floor space, jewelry was prime for an operational makeover.
With help from consulting firm and supplier Johnston Equipment, TSC opted to install vertical carousels. This meant a huge reduction in the floor space needed to accommodate the jewelry fulfillment operation and gave the company the ability to revamp the department’s whole floor area.
Brian Rodway, Johnston Equipment’s project manager and system sales manager for Ontario, says there was a bit of a selling process to convince TSC senior management of the business case for the carousels, but the project went ahead within four months. That was in July 2014, ready for the busy fall holiday shopping season.
After testing and training was completed, it took TSC three to four weeks to load the carousels, but there was no need to shut anything down since the system can be shifted from loading to order fulfillment essentially at the flip of a switch.
Now the three, 29-foot tall Kardex Remstar Megamat RS vertical carousels stand side-by-side against the exterior wall, where, combined with Power Pick Global (PPG) inventory management software, they are used to manage the jewelry and coin inventory.
“Because of the small size and high value, jewelry was perfect for carousel technology,” McGibbon says. “It was a fit made in heaven.”
With the transition to the automated equipment, over 8,000 jewelry and coin SKUs are now managed in 75 percent less floor space. The department was reconfigured, moving the packing stations closer to the carousels and feeding them with conveyors. Packing productivity has also soared, according to Rodway. Overall, he estimates the equipment investment paid for itself in about 14 months.
TSC’s fulfillment is driven by customer demand. “Our order volume is highly variable. Depending on the shows and promotions some days have 600 orders and some days 100 orders,” McGibbon says. “That was a big labour challenge for us in the past, especially at the peak when demand is as high as 2,000 lines per day with one shift. But with the carousels we’re able to manage the fluctuation easily.”
With the implementation of the carousels and moving returns handling to another department, jewelry distribution requires 10 people; down from 22 previously required to receive, pick, pack, ship and process returns.
Further, throughput has increased from a previous average of 40 lines per hour, per person to an average of 165 lines per hour, per person, now a standard facility KPI (key performance indicator). At peak times the system handles 240 lines per hour, per person. Jewelry distribution now requires 54 percent less total labour and has increased productivity by 600 percent.
As a major employer in the area, TSC employs a dedicated and seasoned workforce; most employees in the jewelry area have been there for over 20 years. “The three carousels reduce the work area of the operator to 32 feet, and with ergonomic delivery there is no wear and tear on the body,” said McGibbon.
In fact, she notes, employees ask to work with the carousels: “There is definitely an element of employee satisfaction that comes with the carousels.”
The picking process
When customer orders are received via web or phone, jewelry orders are split separately from floor inventory. Orders for jewelry are downloaded into PPG for easy fulfillment. “Once the order is placed, then the fun really begins,” says McGibbon.
To start, the operator scans a paper order followed by a tote license plate, placing the order paper into the tote—this ties the order to the cell location. In a process uniquely designed for TSC each tote has 12 compartments and there are 10 totes in a batch, allowing the operator to fill 120 orders simultaneously. The totes rest on a counter across a narrow aisle from the carousels. Once each order is assigned to a tote location the operator is ready to pick.
As directed by PPG, the carousels deliver the required SKUs to the access window, pinpointing the exact location and quantity to pick using the transaction indicator centre (TIC) monitor located at the work counter. The operator picks the correct quantity and pivots 180 degrees to the batch totes of 120 orders to distribute them.
Above each batch tote position is a display monitor that shows the operator the exact tote cell in which to place the item, and the quantity required. As each SKU is deposited into the tote cell, the operator confirms the put.
Once all of the SKUs are distributed among the orders, the operator turns back to the vertical carousels to pick the next item, which has by now been delivered to the access window. This allows the automated units to always work one step ahead of the operator, minimizing operator wait time.
On completion, orders are sent down the conveyor lines to the shipping area where they are checked for accuracy by a scan of the paper order and a scan of the item(s) within the compartment. “The pick-to-light on the carousels works; accuracy is steady at 99.9 percent,” said McGibbon.
If a show or promotion is planned for a jewelry item, it is inventoried in the floor area on a pallet. High velocity and high volume items are not handled in the carousels. Once the show or promotion for the specific item has ended, the remainder of inventory is stored within the carousel.
Return to sender
Returns are a challenge for any distribution operation, but especially retail. Jewelry sees an average of 2,500 pieces returned weekly. Returns start as a manual process with all jewelry having to be thoroughly inspected and cleaned before it can be returned to inventory.
Once this process is completed and the item is deemed acceptable to return to inventory by the returns processing centre, it is sent back to jewelry. Upon receipt, the operator processes each return individually, using the PPG software to assign a storage location within the carousel.
The carousels are scheduled for regular quarterly maintenance, and have occasionally required minor service, McGibbon says. “Johnston Equipment has been wonderful,” she says, adding that the service tech is always on site within an hour of being called.
Because there are three identical units on site, the team has learned that if a minor item needs attention on one carousel the other two will likley have the same issue shortly afterwards, prompting the technician to do preemptive maintenance and saving time and further visits, McGibbon says.
The crown jewels
TSC’s jewelry distribution is managing and filling orders faster than ever. “The carousel system has given us the flexible solution we need for our operations,” McGibbon says. “We are trying to put more and more in the carousel. We realized that going up was the solution, not spreading out. We carry so many products and they are changing daily. You have to be looking at ways to use height and not the floor space.”
The success of the strategy shows in the jewelry department. It’s tidy, quiet and staff are smiling. The day we visited there were about 100 orders slated for fulfillment. McGibbon promised a demo, but the operator was so keen that she had filled them all before we arrived.
So we had to take McGibbon’s word for it: “Just watching it in operation is sweet. It really is a sweet little machine.”
As far as the TSC jewelry fulfillment team is concerned the carousels clearly outshine the bling they contain.